[photopress:Matson.jpg,full,alignright]Using five, relatively small fuel-efficient Matson has launched a weekly service from Shanghai to Long Beach, California that takes a few days less than the usual trip. Matson is, in effect, betting US$365 million bet that speed sells.
Matson Chief Operating Officer, Matt Cox, said, ‘For us, the question has always been this: How does a niche company survive in the land of the giants? Well, you don’t retreat into greatness. We want to be part of the China business.’ Matson has entered the China trade at what some analysts regard as a difficult time with an over-supply of ships.
It is competing by using less than half its tiny fleet of 12 container ships against the likes of Danish shipping giant AP Moller-Maersk Inc, which has a fleet of 250 ships worldwide.
Five months after the start of the new China service Matson has signed 138 customers and during the second quarter moved 7,500 containers — both ahead of projections, the company said. But Matson suffered from lower-than-expected freight rates and by high fuel costs. Those pressures, plus start-up costs for the China operation, cut second-quarter operating income from ocean transportation to US$24.4 million from US$38.7 million a year earlier.
Matson ships make a 35-day voyage starting in Long Beach with stops in Hawaii and Guam before heading to Ningbo and Shanghai in China. While other carriers send their ships to China carrying a substantial number of empty containers, Cox said that Matson’s are full, at least for the leg to Hawaii.
Matt Cox said, ‘Our tolerance for low freight rates is probably higher than those who rely on that China to the West Coast leg for their entire profit.’
Simon Croom, executive director of the Supply Chain Management Institute at the University of San Diego, said, ‘If you’re a customer with a goal of obtaining frequent, small deliveries, where the offloading and uploading is quick, it makes eminent good sense.’
Chief Financial Officer Jim Ehren of Crystal Art Gallery in Vernon, California, said, ‘Included in their service was bringing the merchandise right to our doors. We don’t need to find a trucking company. We don’t need drivers. Basically, it was like one-stop shopping. It is great for us.’
Source: China Post